Among them, the Chicago Tribune cites a recent report by Allianz Life, an insurance company, which looked at investors with more than $200,000 in investable assets. Within this well-heeled group, 82 percent of 25- to 44-year-olds believe market volatility will likely continue and prefer investments that’ll shield them against losses.
“These young investors are essentially saying it’s better to be safe than sorry,” Katie Libbe, vice president of consumer insights at Allianz Life, tells the Tribune. “That is not the correct advice for someone who is 35 or 40 years old and needs to grow their assets for retirement.”
“Since hitting a low in 2009, U.S. stocks have more than doubled and are still on a tear. The Standard & Poor’s 500 index is up about 25 percent this year,” the Tribune notes.
“Putting together a smart financial plan, which includes stock investments, is crucial for young investors. Otherwise, young people could miss out on years of compound growth and be forced to save a much larger share of their income to make up the difference, or reach old age with smaller nest eggs.”
As bad a portfolio may look during a downturn, buy-and-hold investors realize that history proves that the market will come back and paper losses do become real gains. BetterInvesting members typically see a slump as an opportunity to pick up good stocks at a discounted prices.
“Investors who kept buying stocks throughout the downturn have recouped their losses — and then some,” Libbe tells the Tribune.
“If you don’t have to take the money out of the market when it goes down, it’s not a realized loss. And if you keep investing, you’re buying shares at a cheaper price.”
And everyone loves a bargain…
BetterInvesting is a national nonprofit organization that has been empowering individual investors since 1951. Founded in Detroit, the association (formerly known as National Association of Investors Corporation) was born out of the conviction that anyone can become a successful long-term investor by following commonsense investing practices. BetterInvesting has helped more than 5 million people become better, more informed investors by providing webinars, in-person events, easy-to-use online tools for analyzing stocks and mutual funds, a monthly magazine and a community of volunteers and like-minded investors. For more information about BetterInvesting, visit its website at http://www.betterinvesting.org/investing/landing/openhouse/blog/index.html or call toll free (877) 275-6242.